Much has been reported during the past months on Amazon and its plans to have their own in-house airline which is planned to operate on continental USA routes.
What was at first an ambition has quickly changed into reality with the first aircraft delivered and operating under the “Prime Air” colours.
Will it stop there?
Most probably not!
There is still a long way to go before Amazon will have its fleet structure fully in place and optimally covering the U.S. domestic market.
The package business is growing at double-digit figures worldwide and it can be assumed that the giant online retailer will also be looking outside of the U.S. borders and taking decisions on where it may best serve its clients by adding “own flights” on other continents.
Europe - is surely also high on their list.
The decision to basically operate and control its own fleet stemmed partly from the troubles that Amazon faced in 2013 when it had to offer refunds to its clients over the Christmas period when heavy delays were incurred due to what was rumored to be late deliveries by their suppliers UPS and FedEx.
Fleet acquisition moves ahead fast
The Amazon managers have been very astute in their deliberations on how best to introduce own dedicated capacity within the USA, thereby streamlining their service and product offering to their clients.
Instead of making heavy investments in an own fleet, the Amazon team opted for close and dedicated operations with some of America’s well-known freight operators.
Atlas Air, Air Transport International (ATI), ABX Air who operate under the Air Transport Services Group (ATSG) and others are all intertwined into seeing that Amazon’s “Prime Air” fleet gets up and running.
And - it seems as if the gambit is paying off.
The first of many Boeing 767 freighters with the Prime Air logo was unveiled in August of this year.
A total of 40 aircraft will be introduced step by step within the near future and Amazon will decide on the best possible sector routings as they go along.
Twenty of these will be operated by ATSG in whom Amazon has in the meantime taken a 9% shareholding with an option for up to 19.9%.
ATSG has stated that in the meantime they have 10 B767Fs in service for Amazon, although not (yet) in Prime Air colours.
Amazon recently announced that a Prime Air service is starting from Charlotte, North Carolina to Stockton, California.
Atlas Air looks like being the largest single supplier of dedicated Amazon aircraft in the future.
The company has also committed to operating twenty converted B767-300Fs to the giant by the end of 2018. That’s just about two years from now.
Because of this deal, Atlas got Boeing to commit to supplying them with nine of these conversions.
On the other side of the U.S. border, in Canada, Amazon has an agreement with Cargojet, the large Canadian freight airline, to fly on their behalf throughout the country.
The next step
The USA is at present probably the most important market for Amazon.
However, when one sees how fast they have grown in Europe, then the question arises as to when and how they plan to ensure the same streamlined supply chain and delivery status that they are presently initiating in the USA.
The other question is how, if at all, the large integrators and the regular cargo carriers are going to compensate for business they will lose because of Amazon “flying its own product.”
Will Amazon continue to expand their fleet within the USA solely with U.S. registered carriers and then look at siphoning off some of the capacity into the local European sectors - or are they looking at the same sort of formula with one or more European or Turkish carriers that they are using in the USA?
Hard to tell at the moment - is our view.
Fact is, however, that Prime Air will not just be a continental USA-based airline operating just throughout the U.S.
E-commerce is there to stay and internet shopping and delivery has won the retail market.
Capacity has to be on-hand to satisfy customers’ needs for even faster delivery.
John Mc Donagh